Good day, ladies and gentlemen, and welcome to the TripAdvisor Third Quarter 2013 Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Will Lyons. Sir, you may begin.

Thank you, Sam. Good afternoon, everyone, and welcome to TripAdvisor's Third Quarter 2013 Earnings Conference Call. I'm Will Lyons, Senior Director of Investor Relations for TripAdvisor, and joining me on the call today are our CEO, Steve Kaufer; and our CFO, Julie Bradley. Before we begin, I'd like to remind you that the estimates and other forward-looking statements included in this call represent the company's views as of today, October 23, 2013. TripAdvisor disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to today's earnings release and TripAdvisor's filing with the SEC for information concerning factors that would cause actual results to differ materially from those expressed or implied by such statements. You'll also find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed on this call in our Q3 earnings release, which is available on our IR site, ir.tripadvisor.com. Finally, unless otherwise stated, all references to selling and marketing expense, general and administrative expense and technology and content expense exclude stock-based compensation and all comparisons on this call will be against our results for the comparable period of 2012. And with that, I'll now turn the call over to Steve.

Thank you, Will, and welcome, everyone. I'm going to take a few minutes and highlight some key metrics and discuss notable developments on our technology and growth initiatives. Julie will then review our financials and outlook before we take your questions. First, some of the numbers. Hotel shoppers grew a healthy 37% during Q3, as we saw solid growth across our core and emerging markets. This drove 13% click-based revenue growth for the period, a quarter in which we saw the biggest negative impact from our meta transition. Our display business continued its solid 2013, accelerating nicely to 29% growth, based upon global sales traction and product differentiation. And our subscription, transaction and other revenue line saw a very healthy 68% growth. It's worth noting that the strong total revenue growth came without much, if any, contribution from our new TV ad campaign, which we began testing in Q2 and rolled out more broadly in the U.S. and targeted international markets at the end of September. As a result, adjusted EBITDA came in better than we had anticipated, as the bulk of our expected TV marketing spend has shifted into the fourth quarter. Most importantly, we continued strengthening our position in the travel planning funnel, making progress on a number of ongoing initiatives aimed at growing our community and user-generated content, amplifying our brand throughout the globe, as well as improving the TripAdvisor experience for users and partners alike. I'll now touch upon some interesting developments in a few of these growth initiatives. First, I'll discuss how we are growing 3 key assets: Our traffic, our content and our brand on a global scale. In terms of traffic, hotel shopper growth, as measured by our logs, remains solid. When including our exceptionally fast-growing traffic to our restaurants and attraction pages,…

Thanks, Steve, and good afternoon, everyone. Third quarter revenue grew 20%, driven by continued strong hotel shopper growth in our click-based business, as well as notable strength in display and continued strong subscription and transaction and other revenue. Currency provided a 1.5% tailwind to total revenue this quarter. Adjusted EBITDA growth slowed to negative 2% versus positive 15% in the year ago quarter. Specific to geographic mix. Revenue from international points of sale was 53% of total revenue during the quarter, which represents a more normalized state versus Q2, when we saw the impact of the country-by-country phased meta rollout. International revenue growth continues to outpace domestic revenue growth, with Q3 international revenue up 25%. This growth is driven primarily by rapid hotel shopper growth globally and strong performance of our display and Business Listings products overseas. International hotel shoppers were up 41%, with LatAm representing our fastest-growing region at 54% hotel shopper growth. In terms of revenue by product, click-based revenue grew 13%. This was driven by hotel shopper growth of 37%, offset by 3 headwinds: 9% to 12% from the meta transition and, approximately, 5% to 10% each from our strong smartphone and the international growth. Drilling down a bit on mobile. Tablet and phone revenue contributed nearly 15% of total click-based revenue, with unique users on phone up more than 200% year-to-date. We see a distinct opportunity to reduce friction and improve monetization on that device. Display-based revenue growth accelerated for the third straight quarter to 29%, ahead of our full year expectations. This is due to better sell-through rates on a global basis. Our client count increased 21% in Q3, primarily driven by new business in APAC and EMEA and an improved rebooking rate in the Americas. In particular, we're seeing nice traction with destination marketing…

[Operator Instructions] Our first question comes from Lloyd Walmsley of Deutsche Bank.

Just wondering on the updated guidance on click-based advertising. It seems like if you were to be able to do the revenue growth on that line item that you did just in the third quarter alone, you could have gotten to the low end of the old guidance. So are you expecting that, that potentially to come in, further slowing in the fourth quarter? And then, I guess as you look at the drivers there, how much of that is just the tougher comp on hotel shopper growth? And how much of that is stability or lack thereof in the metasearch auction? Is there still a lot of movement going on among the key players? Or do you feel like they've figured out what they need to do and the metasearch drag will thus be reduced as we go forward?

Sure. But first, I just want to reiterate what the guidance was originally. It was the high-teens to low-20s. And we've moved it down to mid- to high-teens, really citing from the hotel shopper side that we have some SEO -- tough SEO comps continuing in the fourth quarter and into 2013. And we're also still seeing some of those other headwinds that I called out between mobile, international and...

Meta.

And meta, which kind of gets us more into a mid- to high-teens range for the full year.

And then just on the metasearch auctions, do you see the drag decreasing in the fourth quarter? And how much of a drag -- how long do you think that drag will continue to be a headwind into next year?

So I guess there's a piece of that answer that we have some influence on and a piece that we really don't. So I look at it as, what can I do for on-site conversion of folks entering that meta funnel? And we had made some progress in the past quarter, not as much as I had originally hoped for, but again some progress. We continue on a weekly basis to do things and think of it as every other week, we find another small win and so they keep adding up. I have no reason to believe that we won't continue to see additional, small incremental wins throughout Q4 as we get better and better at optimizing conversion. I certainly don't think that we're done, we found everything that there is. The perhaps higher level of optimism that I had at -- in our last call, in terms of what we would be able to do in Q3, has led me to be a little more cautious about my optimism of what we could accomplish in Q3 that we didn't quite deliver on in terms of improving that meta conversion experience, has led me to be more cautious about expecting even higher gains in Q4. If they come, great, we're -- it doesn't change our actions. The other half that relates to meta monetization is what pricing does. And so clearly, our -- most of our clients are still experimenting frequently with the auction. We expect that to continue, think of it as forever, as people adjust their bids up and down. And in my remarks, I referred to it as choppy because it's hard for them to figure out the dynamics as they change -- as one client changes their bids and then it affects others and vice versa. And it's just -- we just think of it as a fluid environment. I'm comfortable that most of the major players are now bidding intelligently. They're very active. The game is on in almost all cases. So the slow adoption by a couple of our partners, that issue is, in my view, mostly going away. And we have an active bidding system. I'm not, in the fourth quarter, projecting a price increase or a price decrease on average because I have no indication one way or the other that clients will bid up or down. So for want of better information, I'm thinking pricing is neutral, conversion will be up a little bit and that's how we build our forecast. It's all subject, unfortunately, from my perspective, from my forecasting perspective, to a lot of conditions that are just beyond my control.

Our next question comes from Nat Schindler of Bank of America.

When going with the meta neutrality -- your getting to monetization neutrality with meta, your customers are all very experienced ROI-based marketers. You basically moved down the conversion funnel. Why wouldn't that follow a very efficient curve? And would I have to say that the advertisers were paying too much before on click-based or too little now?

Great question and one we wrestle with when we think, Hey, wait a minute, I have apples-to-apples number of travelers, we changed the interface, but they're still, at the end of the day, going to book the same number of hotels because I haven't fundamentally changed anything. So why are we making less money than we were before, if you assume that clients are bidding at the same efficiency level, if I could paraphrase your question. I think part of it comes down to, when we were sending a lot of clicks over to our clients in the old pop-up mechanism, we were actually spawning lots of windows and lots of sites. And perhaps, TripAdvisor was getting some credit for transactions that didn't happen at that point in time. If I try to remember my own remarks from a couple of years ago, pre-meta, when I was talking about why I didn't think the meta model would monetize as well as our old model, I referred to the fact that we actually sent a lot of traffic. And some of that traffic would buy arguably not what was intended, if you will. So a click over to a Hilton hotel on Expedia would end up buying an airplane ticket somewhere. And now the click over to Expedia is only happening when they like the price that they've seen for that Hilton property. So it's much more qualified and less likely to perhaps buy something else. So maybe we were getting a little bit more credit for something that we didn't get before, or maybe we were getting more credit before than we're getting now in terms of attribution. The other use case that we certainly note is, on TripAdvisor today with our meta experience, you can check the prices. You…

And just a follow-up actually on something you had said on your last call about traffic issues and you -- I think you mentioned in August at an investor conference persisting. You still came in with very high total traffic growth and you've decelerated only slightly on hotel shopper growth. Are you seeing any macro issue on travelers?

I wouldn't say that there was any big macro event this past quarter that I would cite as materially affecting us. Our overall traffic growth, I expect to continue some pretty high numbers as our attraction and restaurant and Vacation Rental traffic continues to grow in extremely strong ways. As you know, we don't monetize that as well, but it remains an incredible undermonetized, underutilized asset that we have that so many people on so many devices are using TripAdvisor far beyond hotels. And so that's -- it's a nice long-term piece of our puzzle. When you look at 260 million uniques and at 60% or 59% year-on-year growth rate, oh, my gosh, that's really big and are really big numbers. So the law of big numbers will say that will decelerate at some point, but it's still adding at such a rate, building up such a nice asset. But again, we call out hotel shopper specifically because that's more relevant to our financials.

Our next question comes from Dean Prissman of Crédit Suisse. Dean Prissman - Crédit Suisse AG, Research Division: So with TripConnect, are there any financial incentives you're considering for your booking engine partners to help them, say, sell Business Listings or even generate ad budgets? And then on the moderation in the year-over-year declines from Expedia revenue, can you comment on the cadence? So was the trend observed throughout the quarter or pronounced at a particular point? And then secondly, any comment on whether activity from brand Expedia or Hotels.com was more of a factor?

So I really don't like to comment on individual client behaviors. So I'll have to take a pass on that one. I did say that all of our big clients are very active on our system now. So whereas a couple of quarters ago I had said that, there were some that were slower to adapt. We don't have that issue anymore, by and large. In terms of the financial -- offering financial incentive to Internet booking engines, we don't actually feel that we need to at this point. Most -- or many, I should say, of these Internet booking engines make money by charging a small transaction fee to the hoteliers. And so anytime they can find a vehicle that helps drive more website bookings for them, they are going to make money as part of that transaction, frankly. So we find most of the IBEs extremely cooperative and very interested in helping their client base, the hotelier, get up to speed and bid on our platform. Again, we think they're making money, if not just providing a good service to the individual hoteliers. The 200-plus sign-ups is a really -- it's a very meaningful percentage. We don't have total figures, but near as we can tell, a very meaningful percentage of all of the IBE players out there and the fact that they've committed to working with us and the only reason it's not 200 certified partners at this point is that, hey, there is some development work that they have to schedule. So they're committed. It's going to happen. We'll have these couple of hundred thousand independent hoteliers and hopefully more over time able to participate in the system. And that's the overall beauty of TripConnect as it adds so many more potential players. We don't think financial incentives are at all necessary to help that along.

Our next question comes from Michael Purcell of Stifel. Michael B. Purcell - Stifel, Nicolaus & Co., Inc., Research Division: I'd like to talk a little bit more about the user engagement. The 37% traffic growth, I was wondering if you could give us some cadence if that did accelerate through the quarter and just geography-wise, if that is -- if you're seeing any difference there? And secondly, on the last call, you gave us some updates about the view pages per session is up 10% and bounce rate. I was wondering if you'd just give us any updates on that.

Sure. So I start with some of the phone because that was the most exciting, post-quarter, I should add, as we rolled out the native apps right at the end of the quarter or early October. And we've seen the expected increased engagement from the native. So we're certainly pleased with that. I don't have an update for you on page views per session or bounce rate. From memory, on the traffic growth, the 37% hotel shopper growth, I believe it was kind of the rest of world growing the fastest. U.S. held their own in terms of growth. If I recall, Europe in terms of hotel shoppers, was weaker in terms of year-on-year growth rate than the U.S. I hesitate a little bit in throwing those out because I don't really know how -- offhand, how they were comparing to previous quarter. So I'm not sure I can help you draw some interesting overall conclusions from that. We do measure bounce rate and page views per session, repeat visit rate and the like. And I don't have anything sort of meaningful to report on those numbers at the moment.

Our next question comes from Scott Devitt of Morgan Stanley.

Steve, in 2012, the gap in hotel shoppers and CPC revenue was driven by site redesign and traffic quality and I think mobile, international and Expedia pricing as well. And then as we transitioned into this year, the gap has been mobile and international and meta. And so it seems like now that those 3 are potentially going to continue into 2014. And I was just wondering if you could speak to whether or not you foresee any other potential headwinds as it relates to monetization as we approach '14. And then as it relates to the 3 that you're facing this year, how you think of those in terms of being structural versus transitional given the length of time that they've impeded revenue growth?

Sure, excellent question. So in terms of those mobile, international and meta. Meta, I think we will continue to make modest improvements as we continue to work on conversion, but maybe slower going than I would have liked. But that one goes away when we lap. So hey, by June, we'll have rolled out 100% and so we won't be facing that headwind anymore. And I don't see a particular reason why that would reemerge as a headwind. International growth, no, we would continue to expect international growth to remain a modest headwind as we continue to grow. As the countries get bigger and more online, the CPCs tend to rise. It doesn't always work that way, but I would put that in the modest headwind category for the next several years. And then mobile, I'm not sure to what extent the reducing the friction, helping to complete the reservation on the phone is going to offset the faster phone growth than desktop tablet. So mobile will be -- will continue to be a headwind because it's growing so much faster than anything else, more than desktop certainly, but it should be less of a headwind for us because we'll be able to take all of our current traffic and the future growth traffic. And we expect to have a monetization improvement on that score. So yes, a headwind, but a decreasing level of headwind, if you will.

And would you envision bringing direct booking from mobile back to desktop, like what you had done with metasearch?

I'm talking about figuring it out on the phone because the phone is really the pain point where the back and forth on the consumer, on the phone -- you open it up, the TripAdvisor app, you look around. You say, Wow, searching in a city for a hotel, great hotel, love the photos, love the this, love the that, found a great price. Click over and you land on booking.com or an Expedia or Hotels.com or Travelocity or -- and then, Hey, I want to check the next rate. And you're kind of lost a bit. You have to -- I mean, when we watch our users, they struggle with getting back to TripAdvisor. And we feel that's the key reason why we're not monetizing as well on the phone. Plus we don't let someone finish the transaction, so they click off. And then, again, they go home and instead of opening up the app again, they go directly to the site that they saw the price and they book. So we lose the credit there. Finishing the reservation on the phone allows us to plug both of those holes. And so if we have a serious hotel shopper on the phone, and we do, we believe we do, and we see other folks report meaningful bookings on the phone, not just people looking, we think we can sort of capture that demand. The need is less on the desktop because you click on the button. It opens a new window. And that's fine. You click on the next button, it opens a new window. You don't have the experience of completely losing the context. So we'll see how it works for us on the phone. We'll see what user reactions are. We're very protective of our unbiased perspective, or our unbiased brand reputation on the part of consumers, so we don't want to be seen as just pushing one particular supplier or going -- we'd never go exclusive in a market, that sort of thing. So we want to maintain our site, where you can do your price comparison and do a reservation through a number of different vehicles on the phone. And again, I'll pass on the question of whether that makes it to the desktop or tablet or not. Phone is where our head is at.

Our next question comes from Douglas Anmuth of JPMorgan. Douglas Anmuth - JP Morgan Chase & Co, Research Division: I just wanted to ask you about CPC trends, in particular by geography, and if you're seeing any material differences there. And then did you, I may have missed it, but did you give an expectation on when you think you can achieve revenue parity under meta?

So I'm no longer talking about a timeframe that I'm going to achieve revenue neutrality on meta because I'm not thinking about it that way anymore. I'm looking at on a weekly basis. We're making conversion improvements. And I'm not sure I can even measure what true revenue neutrality looks like anymore. So it is what it is. We're not moving back. We'll comp over it. And we're -- and the appropriate question, if you will, each quarter might be, Hey, so how many points of conversion improvement do you think you can get over the next quarter or how many did you get over the last quarter sort of thing. And to answer that now, I said, Hey, we made a smaller-than-expected conversion improvement in Q3. And we still think that there is improvement we can make in Q4. We don't think we've tapped the low-hanging fruit. The CPC trends by geography, this is a little bit from memory here, but U.S., Canada, Australia, probably pretty strong markets. Southern Europe, still weak in terms of overall CPCs. I'm not sure that, that's going to change in the coming quarters just because of the overall economic situation. I don't see big clients missing. I don't see big potential changes that happened in the last 2 months that would make me predict something is going to change in the next 2 months that would sort of fundamentally cause any one market to be particularly strong or particularly weak. And we'll we chat again in the next quarter.

Our next question comes from Tom White of Macquarie.

Steve, I think intra quarter you made some comments that suggested you guys might roll out your brand marketing campaign internationally more, add additional countries throughout next year. Maybe can you give a little bit of color on how broad that might be and, if possible, put some numbers to it? And then just on the question -- the prior questions about CPC trends for sort of outside the U.S. I know it's kind of hard to isolate, I guess, what's been happening with those independent of this meta change. But as we look out across 2014, what do you think is the best way for us to assess whether that kind of pricing headwind from some of these newer markets may be closing or that delta might be closing relative to U.S. CPC pricing? Is it just kind of changes in ADRs in those markets or are there other factors?

Excellent question. I'll take each in turn. So the brand marketing and the national rollout, let's see, we're very big in the U.S. now. In Europe, we've been testing in Spain and France. We do -- when we think TV, we do think global. As you have to create a TV ad, it's a little hard to create -- we found it hard to create one that would instantly work and be testable in every market. So there's, as you can imagine, additional production cost, depending on the markets that you seek. We picked a few different markets because we wanted to see if we'd be able to measure a benefit that would come in a market as small for us as Argentina versus as large as us for the U.S. And so it's quite possible -- I'm not saying we're doing this, I'm just saying it's quite possible -- that we will choose to continue to -- we will continue TV in 2014 in markets where we need strong awareness and go light in markets where we're already particularly strong or vice versa. There's -- given how global we are, there's so many different places that we are going to have to make some strategic tradeoffs in the market. I don't have any numbers to share because we haven't set those ourselves because we don't have results yet from the current tests. So it's -- I remain cautiously optimistic about television having a meaningful effect on the business. We do have to take a longer-term view. I'm not interested in testing at the level that we've been out in Q4, expanded to all markets throughout 2014. That would sort of kill us. And we really wouldn't have a lot of logic behind that. That's why we did a test.…

Our next question comes from Mark Mahaney of RBC Capital Markets.

I just wanted to ask one quick question on TripConnect. Have you noticed any increase tensions pushback from some of your larger OTA partners with the rollout of that product? And Steve, I know you mentioned some statistics in there about properties that have never been involved with any OTAs in the past. But nonetheless, as you do this, have you noticed anything that has encouraged you or discouraged you in terms of the timing and the strength of which you roll out TripConnect?

Mark, good question. No, we really haven't had a pushback from our OTA clients. While somebody that's not an OTA client bidding on a new property probably wouldn't notice, wouldn't care, they might well ask, Hey, if this adds another bidder to the auction, that might not be good for me, the OTA. But you have to remember, we have a lot of OTAs in our auction already. So adding one more player, in most markets, there's lots of players. So it helps, from our perspective, in pricing. But it's not, from an OTA perspective, a particular sort of meaningful. By point of comparison, hey, we could sign up another OTA that has 20,000 properties to add. And boom, in one day, all of a sudden, 20,000 more properties have competition. It will take us a long time to sign up 20,000 more individual hoteliers who are all managing their self-service CPC bids. So in the scheme of adding competition, sure, it adds some competition. In the scheme of OTAs losing click share, that's a little further down the road to see. And OTAs are absolutely used to competing with each other on our site. They're used to competing directly with the hotel chain on our site. They're used to, in a small degree, competing with independents who are represented by aggregators before because we always had some of those. And so adding thousands or tens of thousands of more independent hotels bidding probably isn't moving the needle for them one way or the other. Maybe it's just a very long-winded way of saying, I'm sure they knew this was coming, like competition comes in all markets.

Our next question comes from Eric Sheridan of UBS.

This was the first quarter where Expedia and Priceline sort of had their owned and operated meta properties inside their own companies. Did you see anything from either a bidding perspective or a budget perspective that might have changed now that Expedia owns Trivago and Priceline owns Kayak and so how that might continue to develop going forward into 2014?

Eric, that's an interesting question. No, we haven't heard anything from clients that indicate their bidding behavior or budgets on TripAdvisor have changed because of this. I say that, knowing full well that why would they tell me if anything had changed. But the behavior we see on the day-to-day client relationship continues to be, we're optimizing our bids on TripAdvisor, how can we get more traffic? Our efficiencies are better, I can add my bids a little more. Hey, TripAdvisor what should I do? Oh, my efficiencies are going in the wrong direction, I need to cut back. Where can I reallocate? It's a partnership. There's a lot of dialogue back and forth. And I'm not even sure of the overlap in terms of the people that we deal with at our big clients, are they the same individuals that are bidding on our metasearch competitors? I suspect, in most cases, they're not. So we're not seeing a -- certainly, we're not seeing a budget shift and we're not seeing any other behavioral shifts that I can articulate.

And our next question comes from Mike Olson of Piper Jaffray.

Just one question on mobile. You've talked about the direct mobile booking solution to kind of help with the fumbling of the handoff issue. How widespread will that direct mobile bookings path be? Like, does it take time to roll out to a broad portion of inventory? Or what are kind of the restrictions or limitations for rolling that out?

So I -- great question. It will certainly roll out over time. It's a new set of flows to make the reservation on TripAdvisor as opposed to just click off. So we have to develop all that. It's a new piece of connectivity with our partners that we need to develop. I'd make the clear distinction between what we're doing on the phone and what we just went through with the classic or pop-up windows over to meta because that transition was truly a, Hey, guys, it's coming. Hey, it's coming. Better get on board. Better get on board. We're launched and you're not participating. And because it was a sort of a big bang launch, you had -- you, the client, had to move from classic over to meta or you just weren't being shown on our site. Whereas the move on the phone to help our travelers finish the booking, or finish the reservation, is not changing anyone's ability to continue to bid for traffic exactly as they're doing now. So you could hypothetically say, Well, hey Steve, if you had one hotel chain, you could roll it out. And that's right. I could. I don't think we'll do it that way, just guessing into the future because we'll want a more robust product offering with more than just one hotel chain as a end provider. But in theory, we could do that because they're not disruptive to all the other bidding and all the other dynamics. It's just -- it's adding another option for the traveler, who doesn't want to click off and just wants to complete the reservation while in the Trip app or Trip mobile experience. Having said all that, clearly, we believe it's the right thing to do. We'll be eager to get as much participation from as many clients as possible. This is kind of news to a lot of folks. And we're eager to chat with as many as we can to have them participate in our launch of this when we pick a timeframe.

Thank you. And at this time, I'd like to turn the call back to Steve Kaufer for any closing comments.

Great. Well, I really want to thank everyone for joining us today. I also want to thank all the TripAdvisor employees around the globe for their hard work and often dedication to the tasks. Our opportunities are large. Our opportunities are exciting. And yet, there remains a lot of work to be done. A tremendous opportunity set of innovative features and innovation to come, as we help serve the traveler all around the globe. We look forward to updating all of you on our progress in the next few months. Thanks.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a wonderful day.